Linear Rescaling to Accurately Interpret Logarithms
Econometrics
2021-10-07 v3
Abstract
The standard approximation of a natural logarithm in statistical analysis interprets a linear change of in as a proportional change in , which is only accurate for small values of . I suggest base- logarithms, where is chosen ahead of time. A one-unit change in is exactly equivalent to a proportional change in . This avoids an approximation applied too broadly, makes exact interpretation easier and less error-prone, improves approximation quality when approximations are used, makes the change of interest a one-log-unit change like other regression variables, and reduces error from the use of .
Cite
@article{arxiv.2106.03070,
title = {Linear Rescaling to Accurately Interpret Logarithms},
author = {Nick Huntington-Klein},
journal= {arXiv preprint arXiv:2106.03070},
year = {2021}
}
Comments
9 pages, 1 figure, 1 table